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Investing your super

Choosing a suitable investment strategy

Your super is your personal retirement fund so it’s important to ensure it is invested the way you wish, in keeping with your personal circumstances and retirement goals.

Most employer funds will have a default investment strategy with a diversified mix of growth and defensive assets. They generally offer a number of other investment strategies ranging from cash to high growth.

In general, the longer you have until retirement the more it makes sense to include a greater proportion of growth assets, such as shares. The closer you are to retirement the more it makes sense to increase the proportion of capital defensive assets such as fixed income to help protect your capital against major market downturns.

However, given that people retiring at age 60 can expect to live for around 30 years more, maintaining some exposure to income-producing growth assets such as blue chip Australian shares leading up to and through retirement can actually help preserve capital over this time.

The particular investment strategy to suit you will depend on your age, your retirement plans, your current accumulated super, your other assets and the levels of risk you are prepared to accept.

Gearing through super

Gearing is using borrowed money to increase your investment amount in the expectation that the total return will exceed the cost of the borrowed money. Gearing will also increase any losses. Many super funds have geared investment options available which borrow to increase their investment amount. Super gearing should be used very carefully but can be an effective way to grow your super over the long term if you if you are prepared to accept greater volatility.

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